Having handled many probate matters in my 12-year career as a lawyer so far, I have noticed a few common mistakes administrators or executors (collectively known as personal representatives) tend to make when administering the estate of a loved one who has passed away.
This is understandable, given the sorrow and grief at the loss they just suffered. Some of them may also be unfamiliar with probate procedures.
I hope that this article can help alleviate some of the stresses of administering a loved one’s estate by taking personal representatives through these common mistakes, and what can be done to avoid them.
Mistake #1: Not Setting Up an Estate Account
Setting up an estate account is a step often overlooked by personal representatives. After being appointed personal representatives, they would often start collecting cheques from the various accounts the deceased may have with government agencies and financial institutions.
However, many are surprised that the cheques are made out to the estate account (i.e. made payable to the estate of “deceased’s name”), and not to them or the deceased.
But what exactly is an estate account?
An estate account is a new bank account opened under a person’s name after they have passed away. It is the account where the personal representative of the deceased deposits the deceased’s monies, including the proceeds from any asset sales.
It is also the account from which the personal representative would pay any of the deceased’s debts, and distribute the deceased’s monies to any of his or her beneficiaries.
Having an estate account is a must. Without it, a personal representative would not be able to cash cheques, and therefore distribute the deceased’s monies amongst the beneficiaries.
Having an estate account also gives the personal representative the added advantage of not mixing his monies with the deceased’s. This would aid greatly in record-keeping, which is part of the responsibility of being a personal representative (more on this below).
To open an estate account with a bank, you typically will need:
- To be physically present at the bank, with your identification document such as your NRIC;
- The deceased’s death certificate; and
- A Grant of Probate (if you’re the executor) or Letters of Administration (if you’re the administrator) indicating yourself as the personal representative of the deceased.
The precise procedure may differ from bank to bank. It would be best to contact your preferred bank to find out their procedure and required documents.
Mistake #2: Not Keeping Proper Records
The main duty of a personal representative is to sincerely administer the deceased’s estate for the beneficiaries’ benefit. This includes providing a full and frank account of the estate if a beneficiary requests for it.
Unfortunately, most personal representatives are unaware of this duty and fail to maintain proper records right from the start. This can lead to unnecessary disputes, which if not settled quickly and amicably, can lead to litigation. Litigation will cost you time and money.
Amongst other things, providing a full and frank account of the estate involves detailing the assets in the estate, how the assets have been spent, for what purpose, and how much has been distributed to the beneficiaries.
While the following is not comprehensive, there are some simple measures that you can take to help you maintain proper records:
- Open an estate account. As mentioned above, an estate account helps to keep your monies separate from those of the deceased. This would reduce any confusion on whose monies you have used, and also help you track expenses and deposits into the estate account.
- Keep receipts of expenses. This will help you track and tally any outgoings from the estate account. Receipts can also act as proof of any outgoings should any dispute arise with the beneficiaries.
- Ensure that beneficiaries sign off if they have received their share of the estate. This involves asking the beneficiaries to sign a written receipt for their share of the estate, and have no further claims against the personal representative or the estate. This will help you deflect any allegations that you have not distributed the estate to the beneficiaries according to their rightful entitlements. A simple sign-off can disprove such allegations and fend off any possible litigation.
Mistake #3: Not Knowing the Size of the Estate Before Calling a Probate Lawyer
Not knowing the size of the deceased’s estate before calling a probate lawyer can slow down the probate process tremendously.
As part of the probate process, a Schedule of Assets must be submitted to the courts. The Schedule of Assets contains all the details of the deceased’s assets and their estimated values.
If a Schedule of Assets has not already been prepared, the probate lawyer must spend time determining the extent of the estate before he or she can create one. This will involve writing to various government and financial institutions and they may take some time to reply.
To be clear, the personal representative need not provide their probate lawyer with a complete schedule of the deceased’s assets. A rough estimate will do. This can be done by going through any available documents of the deceased, such as bank statements or property deeds. With this rough estimate, the personal representative then has the option to ask the probate lawyer to:
- Focus on getting the probate application done quickly. The personal representative can assume that the Schedule is complete, and not require the probate lawyer to write to government and financial institutions, which will save time; or
- Focus solely on writing letters to other institutions to determine if there are any other assets that the personal representative has missed out on. While the personal representative may know some of what the deceased’s assets, this knowledge may not be complete. For example, the personal representative may not be aware of the assets of the deceased that are located overseas or acquired recently before death.
In either case, the probate process can proceed more quickly. It is estimated that if the Schedule of Assets is readily available, the entire probate process can be as short as 3 to 4 months.
Mistake #4: Confusing the Probate Rules for Personal Representatives and Beneficiaries
Personal representatives are not excluded from getting a share of the deceased’s estate
First, there is a general misconception that a personal representative cannot get a share of the estate. This is not true. A personal representative is someone appointed or acknowledged by the court to administer the deceased’s estate. On the other hand, a beneficiary is someone who receives a portion of that estate. However, these two roles are not mutually exclusive. A personal representative will still be entitled to his or her share of the estate if he or she is also a beneficiary of it.
Personal representatives can renounce their position without losing their share of the deceased’s estate (if any)
Second, there is also confusion regarding renouncing one’s right to be a personal representative (i.e. giving up their right to be a personal representative). Renouncing the right to be a personal representative is not the same as renouncing one’s right to a share of the estate.
Take the example of a father who dies without a will, leaving behind his wife and a daughter. In such cases, the law prioritises certain people to be an administrator. This is called having prior rights. In this example, his wife would have prior rights over his daughter in being the administrator of his estate.
However, the deceased’s wife may choose to renounce this right in favour of her daughter. In other words, she gives up her right to be the personal representative of her husband’s estate, such that her daughter can be the personal representative instead.
This can be for various reasons, such as the wife not having the time to administer the estate, not being tech-savvy such that it impedes the administration process, or simply because the daughter may be more familiar with the probate process.
Whatever the reason, if the wife chooses to renounce her right to be the personal representative of her husband’s estate, this does not mean she also renounces her rights as a beneficiary. The wife would still be entitled to her share of her husband’s estate.
Therefore if you are a beneficiary with prior rights to be a personal representative but are reluctant to take on the role, rest assured that renouncing your prior rights will not mean that you will lose your share of the estate.
Nevertheless, if you are still unsure of the implications of renouncing your prior rights, you should seek the advice of a probate lawyer before deciding.
As you can see, probate is not necessarily a straightforward matter. Its many intricacies can overwhelm a personal representative handling the administration of an estate for the first time.
If you are in this position, remember to:
- Open an estate account;
- Maintain proper records of the incomings and outgoings of the estate account;
- Have a general idea of the size of the estate before approaching a probate lawyer; and
- Be clear that a personal representative who is also a beneficiary is still entitled to his or her share of the estate if he or she renounces the right to be a beneficiary.
Doing all these will allow a smoother probate process.
Handling probate issues by yourself while you are grieving the loss of a loved one can be stressful. If you are overwhelmed or uncertain of your duties as a personal representative, allow a probate lawyer to help and advise you in such a trying time.